Copper prices are on a swift downturn, at one point falling to its lowest price in three in a half years, as some analysts call this a correction in the market while other cite a weakening in the Chinese economy as reasons for the drop.
This much we do know: On February 18, copper was selling for nearly $3.28 a pound. The price dropped slowly for 10 days, closing at $3.19 a pound on February 28. On March 6, it closed at $3.21 a pound, and the next day the rapid decline started. By March 11th, the price had fallen all the way to $2.90 a pound.
Some analysts believe the speed of this latest drop means there is no telling how low the price will actually go, but one did speculate to Forbes Magazine that $2.55 a pound is not out of the question. Another analyst believes that since copper prices fell so sharply and so quickly, there is not way to determine the low point, but that it could be potentially large.
China is the world’s largest user of copper. But right now, the Chinese economic growth is weakening, meaning less construction and copper use. Other analysts believe that since coppers previous low in October of 2011, the price has only rebounded temporarily, and this dip may be a better indication of the price of copper for a while.
One trader told Forbes that he won’t believe copper prices have fully rebounded until they hit $3.35 to $3.85. And he believes it will take a long time to get there, and not to look for a fast rebound.
Analyst Caroline Bain told CNBC that her firm believed 2014 would be a year that copper prices fell. But, she adds the speed of this recent price decline has even taken her firm by surprise, and she sees more falling prices in the future.
tED magazine and www.tedmag.com will continue to keep an eye on copper prices as they fluctuate over the 2nd quarter of 2014. Look for updates in tED magazine each month and online as necessary.Tagged with tED